Iran War Impacts Energy Lifeline, ADB Lowers Asia's Economic Outlook
Due to high dependence on Middle East energy supplies, Asia is at the core of the spillover impact from the Iran war (Middle East conflicts). Countries are lowering economic growth forecasts and warning that soaring import costs could push inflation much higher than expected weeks ago, with rising prices bringing more hardship.
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- 📰 Published: May 4, 2026 at 12:21
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Central News Agency (London, May 3, Comprehensive Foreign Report) - Due to its high reliance on energy supplies from the Middle East, Asia has become the central region experiencing the spillover effects of the Iran war (Middle East conflicts). Countries are lowering their economic growth forecasts and warning that soaring import costs could cause inflation to be much higher than anticipated just weeks ago, with rising prices bringing more hardship.
According to the Financial Times of the UK, with increasing uncertainty in the economic activity outlook, the Asian Development Bank (ADB) has lowered its growth forecast for developing economies in the region. The ADB now predicts Asia's economic growth rate to be 4.7% this year and 4.8% in 2027, down from its previous estimate of 5.1% for both years.
The ADB also predicts that inflation will reach 5.2% this year, higher than last year's 3%.
ADB President Masatsugu Asakawa stated that the region is being impacted by an escalating crisis, saying, 'We are facing not a short-term fluctuation, but a systemic, long-term disruption to global energy and trade networks.'
Economists from private institutions point out that even wealthier Asian nations may need to conserve resources more. Japan, the largest developed economy in the region, saw its central bank policymakers recently halve the real GDP growth forecast for the fiscal year ending next March from 1% to 0.5%.
Frederic Neumann, Chief Asia Economist at HSBC, stated that Asian central banks are facing a 'huge' inflation shock.
Neumann noted that subsidies and the use of reserves might alleviate the problem slightly, 'but in the current situation, these are just a drop in the bucket. The degree of disruption is so severe that its impact is not limited to energy but will also affect food and other costs, spreading throughout the region.'
South Korea's import prices in March surged by 16.1% compared to the same period last year, marking the largest single-month increase since January 1998; while Japan, facing greater pressure on its exchange rate due to rising import costs, used US$35 billion last week to support the yen.
In India, although local officials state that they will remain the fastest-growing large economy globally, the Reserve Bank of India (RBI) estimates that the growth rate for the new fiscal year starting April 1 will decrease from last year's 7.6% to 6.9%, and warns that subsequent forecasts are 'biased downwards' due to the Middle East conflict's impact.
The Monetary Authority of Singapore implemented its first monetary policy tightening in four years in April; the Reserve Bank of Australia will meet this week to decide whether to raise interest rates for the third time in 2026.
Neumann stated that central bank officials are increasingly concerned about economic growth risks, an impact that will be more severe than the inflation shock, especially for poorer countries with weaker response capabilities.
Thailand, Southeast Asia's second-largest economy, has lowered its growth forecast for this year from the original 2% to 1.5%, while expecting inflation to reach 3% this year, significantly higher than the previous forecast of 0.3%.
The impact of soaring prices has prompted some countries to consider providing temporary protective measures for consumers. Japan launched fuel subsidies, keeping gasoline prices only about 10% higher than when the Iran war (Middle East conflicts) first began; the Philippines subsidized public transport drivers; and Vietnam used emergency funds to curb rising fuel prices. (Compiled by Chen Yi-wei) 1150504
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According to the Financial Times of the UK, with increasing uncertainty in the economic activity outlook, the Asian Development Bank (ADB) has lowered its growth forecast for developing economies in the region. The ADB now predicts Asia's economic growth rate to be 4.7% this year and 4.8% in 2027, down from its previous estimate of 5.1% for both years.
The ADB also predicts that inflation will reach 5.2% this year, higher than last year's 3%.
ADB President Masatsugu Asakawa stated that the region is being impacted by an escalating crisis, saying, 'We are facing not a short-term fluctuation, but a systemic, long-term disruption to global energy and trade networks.'
Economists from private institutions point out that even wealthier Asian nations may need to conserve resources more. Japan, the largest developed economy in the region, saw its central bank policymakers recently halve the real GDP growth forecast for the fiscal year ending next March from 1% to 0.5%.
Frederic Neumann, Chief Asia Economist at HSBC, stated that Asian central banks are facing a 'huge' inflation shock.
Neumann noted that subsidies and the use of reserves might alleviate the problem slightly, 'but in the current situation, these are just a drop in the bucket. The degree of disruption is so severe that its impact is not limited to energy but will also affect food and other costs, spreading throughout the region.'
South Korea's import prices in March surged by 16.1% compared to the same period last year, marking the largest single-month increase since January 1998; while Japan, facing greater pressure on its exchange rate due to rising import costs, used US$35 billion last week to support the yen.
In India, although local officials state that they will remain the fastest-growing large economy globally, the Reserve Bank of India (RBI) estimates that the growth rate for the new fiscal year starting April 1 will decrease from last year's 7.6% to 6.9%, and warns that subsequent forecasts are 'biased downwards' due to the Middle East conflict's impact.
The Monetary Authority of Singapore implemented its first monetary policy tightening in four years in April; the Reserve Bank of Australia will meet this week to decide whether to raise interest rates for the third time in 2026.
Neumann stated that central bank officials are increasingly concerned about economic growth risks, an impact that will be more severe than the inflation shock, especially for poorer countries with weaker response capabilities.
Thailand, Southeast Asia's second-largest economy, has lowered its growth forecast for this year from the original 2% to 1.5%, while expecting inflation to reach 3% this year, significantly higher than the previous forecast of 0.3%.
The impact of soaring prices has prompted some countries to consider providing temporary protective measures for consumers. Japan launched fuel subsidies, keeping gasoline prices only about 10% higher than when the Iran war (Middle East conflicts) first began; the Philippines subsidized public transport drivers; and Vietnam used emergency funds to curb rising fuel prices. (Compiled by Chen Yi-wei) 1150504
Choose to stand with the facts, every sponsorship you make is the power to protect press freedom.
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The text, images, and videos on this website may not be reproduced, publicly broadcast, publicly transmitted, or utilized without authorization.